Elevation Capital Group strongly believes it’s found a winning formula by investing in a combination of self-storage facilities and mobile home parks.
Its Fund 7 (MHPI VII LLC) opened in April 2017, attracted more than 500 members and raised $150 million – in an offering that began with a $100 million maximum—before closing April 1, 2020.
Now, the Orlando, Florida-based real estate investment company has Fund 8 in play. It opened Aug. 28, 2020 and will close on Aug. 28, 2021. It, too, has a $50 million goal, already has commitments of $20 million-plus, and principal/fund manager Ryan Smith and fund manager Brian Dahn think they’ll be able to expand it to $150 million as well. The investors are almost all individuals, not companies.
“The capital raise has gone very well so far,” Dahn said. “Self-storage seems to do real well in all economic situations. It’s been fine during COVID(19); there was a little bit of a hit in the spring and summer, but it’s come back pretty well.
He cited month-to-month leases and the ability to raise rents among self-storage’s attributes.
As for mobile home parks, Dahn researches whether or not they can raise rents, create pads to add more mobile homes and improve nearby parks.
“We also improve the quality by having the tenants do a little better job cleaning up their yards, so the overall look is much better,” he said.
Elevation works only with self-storage and mobile home parks.
“Based on what we do and the reasons behind it, the only two categories that check the boxes for us are self-storage and mobile homes,” said Smith, who started Elevation with his wife Jamie (who’s also a principal) in 2013. “We expect that to not change, to stay the same for a long time. Fund 7 was part of our latest 10-year business plan, kind of the beginning of our next decade.”
And yes, they’re talking about launching a Fund 9 in the future.
A perfect match
Overall, Elevation has bought properties worth more than $475 million and has interests in more than 175 assets in 30-plus states. Fund 7 controls 7,000-plus units with 19 assets in seven states.
Fund 7 makes monthly distributions to members and it’s expected to continue to do so.
The Smiths started working with in mobile home park business 17 years ago, with self-storage on the back burner.
“Brian has long been with the self-storage business,” Ryan Smith said. “As we got to know each other, it became more sensible to add the product type of the other. We came together and do both.”
Elevation got a boost when regulation D 506(c) offerings were allowed. That enabled companies such as Elevation to raise capital and to advertise. Elevation expanded its reach by putting up a website.
What do they look for in buying properties?
“Good location, properties that have an up side in the long run, ma-and-pop owned, a good submarket and a good location within the submarket,” Smith said. “In short, we’re looking to buy quality assets that we can hold for a long period of time.”